By the Way, Is That an Official Secret?
Financial analysts feel a chill from government leak plugging

When a journalist asks the research director of a Singapore-based international
brokerage, "What are the implications of the Official Secrets Act trial for
the financial services industry?" he replies: "The most obvious implication
is that I'm not going to continue this conversation for long."

In Singapore the distances between journalists, analysts and government officials
are widening -- literally. When Monetary Authority of Singapore officials
meet private sector analysts in the authority's conference room, says an
analyst, they now place two tables between them to prevent peeks at official
papers.

Singapore bureaucrats have always doled out information sparingly. But discussions
with them often helped analysts understand the thinking behind policy making.
That made their research reports more valuable than mere reiteration of dry
statistics. Yet even that limited access has diminished in the wake of the
Official Secrets Act conviction of a government economist, two private sector
economists and two journalists at the republic's financial daily, Business
Times. A senior economist says: "Outside researchers who fly in for two days
to meet officials and who don't have old contacts will find it more difficult."

Four days after the Singapore convictions, financial professionals in Hong
Kong and China were ruffled by a similar chill. Beijing revealed that Hong
Kong newspaper reporter Xi Yang had been handed a 12-year prison sentence
after a secret trial for "stealing state secrets." Xi, a Chinese citizen,
had allegedly obtained confidential information on gold sales and interest
rates. His "main accomplice," People's Bank of China official Tian Ye, was
given 15 years. Officials said the leak caused huge losses to the national
economy. How much? That was a state secret.

Researchers, journalists and others who deal in financial information in
China were forced to wonder just what might be considered sensitive by Beijing's
cadres. "It's caused financial analysts a real scare," says a Hong Kong-based
stock market analyst who travels frequently to China. "When you talk to Chinese
companies, you may be asking for state secrets without even knowing it. Now
I'm reluctant to take documents out of China." And that means clients receive
less information.

The Singapore saga began on June 29, 1992, when the Business Times did something
no Singapore newspaper had ever dared before: It published the official "flash
estimates" of second quarter economic growth before the government released
them. A few weeks later, seven investigators from the Internal Security Department
walked into the office of Patrick Daniel, editor of the Business Times. And
in Shenton Way and Raffles Place, the financial community realized that leaks
would not be tolerated, even if it meant a costly trial of, in the attorney-general's
words, "five distinguished gentlemen."

The defendants were Daniel; Business Times economics correspondent Kenneth
James; economists Manu Bhaskaran of Crosby Securities Pte. Ltd. and Raymond
Foo of Crosby Research Sdn. Bhd.; and the respected director of the Monetary
Authority of Singapore's economics department, Tharman Shanmugaratnam. The
government could not prove that Shanmugaratnam actually communicated the
confidential data to Bhaskaran at a meeting, but he was found guilty of "negligence,"
or as a local wag put it, "keeping his desk untidy." Bhaskaran, who took
the naughty peek, and Foo, who got the information from his colleague, were
found guilty of receiving the information and passing it on to James, who
sent an electronic mail message to Daniel. In its defense, the newspaper
said it decided to run the story after a senior government official told
a correspondent that the corporate sector's "rah rah feeling" needed to be
curbed.

The trial showed that none of the accused had profited from inside information
and that publication did not move the stock market in any way. The five men
were let off with fines after Attorney General Chan Sek Keong -- who took
the unusual step of prosecuting the case himself -- surprised the court by
saying: "I would not go so far as to say that a custodial sentence would
be the correct sentence."

Peter Sutherland, research director at DBS Investment Research and a resident
of Singapore for 15 years, says he is surprised the incident ever occurred.
"If I had come across such information I would never have used it. How can
you publish in Singapore what's not released? That's the unspoken rule. Singapore
sees itself as no different from Britain or the U.S., where the release of
financially sensitive information is supposed to be watertight."

Agrees Richard Palmer, a director at Ong and Company Pte. Ltd., a prominent
local brokerage: "We take regulations in Singapore seriously, and if there
are gray areas we defer to the government. This will not hamper our forecasting
ability. This incident does not change things; it highlights the law for
us. If you don't like these rules, you can move to Hong Kong."

The editor-in-chief of English and Malay newspapers at Singapore Press Holdings
Ltd., Cheong Yip Seng, says the issue is not press freedom but confidentiality
of government documents. Senior Minister Lee Kuan Yew offers further advice.
He has warned private sector economists not to act as "pressure groups" to
influence government policy.